Buying a home is a long term commitment that requires preparation.
Here is a checklist of a few steps you should take before making your decision:
Verify your credit score
The first thing a lender checks is your credit score. The higher your score is, the better the rate on your loan. You’re entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. Order online from annualcreditreport.com, the only authorized website for free credit reports, or call 1-877-322-8228.
Pay down or clean up debt
Once you receive your credit report, review it for discrepancies. Report any errors to the credit bureau and have them removed. Pay down as much debt as possible. This will lower your debt-t0-income ratio.
How much home can you afford?
Make a clear and precise budget in order to calculate a comfortable price point. There are many free mortgage calculators online that estimate what your monthly payment will be.
Find a mortgage lender and get pre-approved
A mortgage broker determines which type of loan is ideal and facilitates the loan application process. Once you obtain a pre-approval letter, you have the power to immediately move forward with potential properties.
Determine your down payment
A down payment of 20% or more allows you to avoid PMI and ultimately helps you pay down your mortgage quicker. Low down payment options are also available and may be beneficial, especially for first time home buyers.
Once you have secured a mortgage rate, avoid disrupting the process by financing a new car or switching jobs. You will have to start all over again and probably end up having a higher rate or having to put more money down.
Work with a real estate agent
A real estate agent is your advocate and assures that your best interests are represented. An agent’s expertise and knowledge create a smooth transition from buyer to homeowner.
Make a “must have” list
How many bedrooms do you prefer? What is your ideal yard space? If you require a basement, would you like it finished? This information enables your agent to show you the most relevant properties.
Check out available homes online
There are many different websites that you can use to review homes in your desired area such as Zillow, Trulia, and Realtor.com.
Have some free time on the weekend. Visit open houses.
View open houses to get a well-rounded perspective of what the market has to offer.
Visit your desired area
Visit areas of interest and make yourself aware of travel patterns, local restaurants, nightlife, schools and any other significant factors.